I've had my Xbox 360 since launch day (yea, I was one of those crazy people that spent the night outside in the cold to get a 360 on launch day) but it wasn't until recently that I decided to plug in the Ethernet and connect to live. I had been wanting to give it a shot for quite some time but it was the Video Market place that made me take the plunge. DVD quality is good, but it's not HD, and the Video Marketplace sounded like a great way to get some HD content.
The first step of course was to sign up for Xbox Live and create my Gamertag. All in all this process was fairly easy although data entry task aren't exactly easy with a controller or remote. The next step was to add some Microsoft Points. While I understand why Microsoft went with a point based system, I found it lacking in a few areas. The conversion from points to a true dollar amount isn't as simple as it should be and some people might even consider it deceptive. 100 points is equal to $1.25, so a $6 HD movie cost 480 points. It would be a lot easier from an end user prospective to see something like $1 = 100 points. Also, you can only add points from your xbox, not from a computer, so I had to once again enter quite a bit of data using the remote. I'm not sure why overlapping data, such as name and address, couldn't be pulled from my live account when adding a payment method to buy points.
As far as the actual Video Marketplace goes I was fairly impressed. The video quality is great, there was a very noticeable difference between DVD quality and the downloaded content. With that being said I still think they have a long way to go. I think the biggest advantage they have right now is HD content, but the selection is lacking. Most users can get SD content via OnDemand pay-per-view and often at a better price and without having to wait for the download. Until the HD-DVD vs. Blueray competition shakes out I think this is a great way to get HD content. From what I can tell there haven't been any additional movies added since the Video Marketplace opened, and some movies I expected to be available in HD, M.I. 3 for example, are only available in SD.
With a some updated content (and maybe the release of a bigger HDD since the HD movies are over 6GB) I think the Video market place has huge potential.